Tariff, traffic and red tape. What a ‘no-deal’ Brexit could mean for Britain.


London – In recent times negotiators have strikingly closed the post-Brexit trade agreement between Britain and the European Union. But the time is running with only two weeks until 31 December when Britain withdraws from the European Union’s Economic Zone, the Single Market and the Customs Union.

This means heavy new taxes on merchandise, gridlocked ports, and certain types of food items that are missing from British supermarket shelves, as well as fishing rights, may clash.

Trading arrangements between the two sides would default to WTO rules, and would provide a major hit for businesses on both sides of the English Channel, particularly in Britain. Here’s why negotiators talk about a “moment of truth” in their attempts to escape a chaotic final chapter for the Brexit saga.

Quite bad Britain has taken decades to integrate its economy with continental Europe and companies freely import and export goods without paying taxes – known as tariffs. If the trade deal was not reached, it would change if tariffs were applied to a limit of goods across the border. For example, cars will attract a tariff of 10 percent. Farmers could also be killed. The average tariff on lamb meat is 48 percent – threatening to ruin some exporters, and dairy items will be subject to a tariff of around 35 percent.

Another major risk is the additional bureaucratic closed ports. Some of it is unavoidable on January 1 – with or without a trade deal – as the check will go up, and merchants will have to complete millions of customs declarations that they had not previously had to make. But this will not spoil any deal and if the port gets jammed on one side of the English Channel, the trucks are stuck on both. More than 7,000 vehicles can be piled onto the roads with delays of up to two days, under what the government calls “the proper worst case scenario”. In Kent, in southern England, a 27-acre space is being built to handle useless trucks, and other contingency plans include deploying portable toilets for stranded drivers.

Almost a quarter of all food consumed in the UK is produced in the European Union and disruption will come at a time, as it is high imports of winter, fruit and vegetable. Food prices will rise, and one supermarket chain has estimated that tariffs could increase the entire British food bill by 3 to 5 per cent. There may also be a shortage of some, mostly spoiled, products. Supply of others, including some drugs, may also be affected, although the government says it has contingency plans to use various ports and supplies have also increased, including Kovid-19 vaccines.

This is correct, and the UK raises funds in tariffs as it imports more goods than exports to the European Union (in 2019, it recorded an overall trade deficit with a block of £ 79 billion or around $ 105 billion). The problem is that the European Union is Britain’s largest trade partner and accounts for 43 per cent of its exports. No EU nation, with the exception of Ireland, would be so badly hurt without any agreement. An official estimate suggests that the lack of a trade deal will take Britain’s economic output at an additional 2 per cent and boost inflation, unemployment and public borrowing.

There is likely to be a basic agreement to fly the planes and operate the channel tunnel train. The European Commission has announced a contingency plan to maintain aviation safety arrangements to avoid grounding aircraft and to keep road freight and passenger transit links open for six months. However, it must be reciprocal, and European road freight rules come with certain “fair competition” conditions, which Britain cannot accept. The European Union’s side has also proposed fishing rights for a year, with European boats allowed to hold British waters, although Britain has rejected that idea.

Big mess. With no compromise in place, French, Dutch and Belgian boats will lose access to British waters, where they have been fishing for decades (or in some cases centuries). This could cause a sea collision and Britain has put four naval ships on standby to protect its waters. But British fish exporters may have major problems to sell in the lucrative continental market and French fishing vessels can disrupt trade by blocking ports.

Many. There will be less cooperation on security and data sharing and the UK will lose its current rapid access to European databases on criminal records and fingerprints. Nor would Britain be likely to get much support on the rules under which its financial services industry could trade on the continent. And there will be no possibility of Britons in the EU having free health care or enjoying student exchange programs. But the rights of European citizens to stay in the UK (and vice versa) are guaranteed under the Brexit withdrawal agreement. It also sets rules to avoid a difficult border in Ireland and Britain has threatened to break parts of the treaty.

Although most of the issues have been resolved, there is no certainty that an agreement will be reached before the deadline. But, with issues at stake, analysts see no deal as a sustainable solution. Britain is the smallest party in this trade negotiation, but has a large economy and is right at the doorstep of the European Union. At some point both sides will have to reach agreements not only on trade But everything from fisheries to financial services. The question is whether it occurs before or after the New Year’s Brexit crisis.

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